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Clearcover Mixes Tech Mastery With ‘Legacy’ Expertise

Online car-insurance startup began in Illinois, and now CEO plans to add 300 jobs in Michigan.

Clearcover Car Insurance is the kind of hybrid startup that could help transform the American heartland into a formidable counterweight to traditional tech havens as the ravages of Covid-19 continue to disturb digital ecospheres on the east and west coasts.

The Chicago-based company has exploited what could be emerging as a sweet spot of the economy of the future in the Midwest, combining the best parts of an all-digital business model that is more common to Silicon Valley with home-grown entrepreneurial verve and the “legacy” know-how that’s endemic to the heartland.

In addition to the company’s 150 jobs in downtown Chicago, Clearcover CEO Kyle Nakatsuji already selected Detroit as a second nexus for expansion with his recent commitment to hire up to 300 people for jobs that will begin virtually and then, perhaps, come together in a downtown location in the Motor City.

“We ran a national search for where to put another center of gravity for Clearcover and landed on Michigan and Detroit,” Nakatsuji told Chief Executive. “It was a very thorough search, and ultimately a few things decided it. We felt good about the pool of talent in Michigan. And also, Detroit seems to embody a lot of the principles we operate under: empowering others, embracing the notion of being the underdog, displaying grit: We have a real cultural fit with the city.”

Clearcover is a fast-growing enterprise disrupting an industry that already had been experiencing profound disruption for a quarter-century or more. It provides car insurance online to consumers who dwell online and wouldn’t know a local insurance office if the agent camped in their living room. A Wisconsin resident and owner of two degrees from the University of Wisconsin, Nakatsuji started the venture-capital operation at insurer American Family in Madison.

“We were spending a lot of our time looking at insurance and the technology landscape and figuring out what to invest in,” he said. “So I decided to start one of my own” with American Family’s blessing.

His approach was to go one better than notable online outfits such as Esurance by designing the whole process of shopping for and purchasing insurance to occur seamlessly and completely within the context of e-commerce.

“We built technology that allows us to streamline quoting and the sale process based on data we can acquire,” Nakatsuji explained. “It’s also based on how we formulate questions. And we selected marketing partners who are relevant to people, as opposed to buying Super Bowl ads,” he said, in an oblique reference to insurers such as Esurance that have taken the Big Game-commercial route.

​At the same time, Clearcover built its claims process to be digital to a level unparalleled in the industry: 96 percent of claims are handled completely virtually. “Consumers get settlements faster,” Nakatsuji said, “and it’s less expensive for us.”

But why not design all of these great e-commerce capabilities in Boston, New York, San Francisco or Seattle? The key — besides Nakatsuji’s Midwestern roots and appreciation for the digital chops of his fellow residents — lay in the fact that much of the traditional insurance industry essentially grew up and still resides in Chicagoland.

“We had a choice where to locate” Clearcover, Nakatsuji emphasized. “We went through an analysis and tried to find the best overlap between a market where we could find world-class tech talent, great insurance talent and where we could raise a lot of capital.

“It boiled down to Chicago and the coasts, and Chicago won on better access to all the insurance talent from Allstate, State Farm, Kemper, Aon and other insurance companies here. Not to mention that elsewhere in the Midwest are great insurance companies such as Progressive and Nationwide, in Ohio.”

For now, Clearcover’s commitment to expansion in Michigan is for virtual jobs in customer experience and claims. Nakatsuji said the company will prioritize hiring of Detroiters for the jobs, making the city a “second hub” for the company. Clearcover already was well into the remote-work mode before the pandemic hit, he said.

“A physical office” in Michigan is “certainly something we’ve thought about,” he said, “but we have no immediate plans.” Nakatsuji added, “Let’s start tapping into the talent in Michigan and the Detroit area and see, as time passes.”


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